Question

The rate of poverty reduction has increased in the post reform period, compared to the previous 30 year period. Discuss. However, reduction in poverty during this period was significantly moderated by the rise in inequality. Explain

Answer 1

The impact of economic reforms on poverty and inequality:-
India began big bang economic reforms in 1991, 25 years ago. It is well known that GDP growth has been very high in the post-reform period. However, GDP is only a metric. Ultimately, the success of reforms depends on how well the people, particularly the poor, grew over time.
Tendulkar's committee:-
Poverty declined faster in the 2000s than in the 1990s.According to data given by this committee poverty declined 0.74 % per annum during 1993- 1994 to 2004-05 in comparison to 2.2 per annum 2004-05 to 2011-12.The poverty of Scheduled Castes and Scheduled Tribes also declined faster in the 2000s.
According to an another study:-
Poverty is declined by 1.36% per annum after 1991 in comparison to 0.44% per annum prior to 1991 according to a study which is done by Gaurav Dutt and others,on behalf of World Bank study.According to them Urban growth is the biggest factor in the rapid reduction in the poverty.
Even though rural areas saw an increase in the post-reform period.
Hence,poverty declined faster but inequality increased in the post-reform period.
Policy makers must follow these steps to reduce poverty and inequality:-
Firstly focus should also be on increase in urban growth and income as the share of urban poverty will rise with urbanization.Higher economic growth, agriculture growth, rural non-farm employment, increase in real wages for rural labourers, employment in construction and programmes . Reservations on the basis ofcaste, class and gender should remove have equal opportunities in education, health, employment and entrepreneurship. Economic and employment opportunities improve with education and skills.